The BBC made a mistake by failing to launch a radio station aimed at children when it unveiled its lineup of digital services, according to its chief operating officer, Caroline Thomson.

Since its push into digital radio seven years ago, the BBC has struggled to find a home for children's programming. Earlier this year, the children's magazine show Go4It was axed from Radio 4. Although the broadcaster still has some children's output on BBC 7, ditching the show ended a 50-year tradition of children's programming on analogue radio.

"We tried with children's radio. But it did not work as a sort of patch on Radio 4 with one programme," Thomson told the Westminster e-Forum in London earlier this week.

"I used to listen to Go4It quite a lot as it followed The Archers on a Sunday evening and you just thought 'what children are listening to the radio after The Archers?' and they weren't. That did not work.

"You could argue that we should have launched a children's channel as part of our DAB [offering]... I think that would be a legitimate thing to argue. As it is, we did a partial service and that has not quite worked."

She added that the broadcaster is exploring other options for children's programming on radio.

Much of the debate at the meeting – which was a follow-up to the publication of Lord Carter's Digital Britain report last month – surrounded the communications minister's plans to take cash from the TV licence fee and use it to support the roll-out of a 2Mb per second broadband service for everyone in the UK by 2012.

After that date, Lord Carter hopes to be able to use the so-called "digital switchover" licence fee cash to support regional news programming and perhaps even children's programming from rival providers. He wants the switchover cash put into a "contained contestable fund", which any potential programme provider can bid to use.

The cash is currently being used by the BBC to help the most vulnerable consumers through the move from analogue to digital television, due to be completed in 2012. But the government's own spending watchdog the National Audit Office reckons more cash has been set aside than will be needed.

Thomson said the BBC thinks the so-called switchover surplus will be £200m to £300m but stressed that with only 1.5% of homes having gone through switchover so far, there can be no apportioning of a potential surplus until "well into next year" at the earliest.

But she also added her voice to the howls of objection that have already been heard from the BBC, about the idea of taking some of the licence fee and giving it to other programme makers.

"The concept of a contained contestable fund is a bit of an oxymoron," said Thomson. "If there is one thing we have learned at the BBC over the course of this whole debate on the future of public service broadcasting starting with Ofcom's second PSB (public service broadcasting) review, it is that claims to the licence fee are unlikely to be contained. The list of potential claimants seems to grow longer by the day or indeed change."

She added that the idea that the fund will be "contained" – in other words remain at a set level – is also unrealistic as the experience in other countries such as New Zealand, where the licence fee was eventually abolished, shows that "containment at some fixed percentage works only until someone thinks of a higher number".

Thomson said: "If further funds are called for, and obviously the state of the newspaper industry and of the other media players means that at the moment the problem does look quite severe, can they really not be found in other ways than breaking the direct link between the BBC and licence fee payers?"

The chair of the event, media commentator and MediaGuardian columnist Steve Hewlett, pointed out that supporting plurality in the supply of news is one of the BBC's public purposes, so why was it so bad for a very small amount of the licence fee to be used for that purpose.

"Plurality of regional news is really important," Thomson responded. "(But) I think the sadness about the Digital Britain report is that it has rather ducked the longer term structural issues about trying to get a really viable industry working alongside the BBC."

Other commentators have pointed out that accepting the switchover cash in the first place has already broken the direct link between the licence fee and BBC programming and services – as it was never intended to be used for the corporation's output.

"I think doing the targeted help scheme is a totally different principle from having the licence fee funding a range of content from other providers," Thomson responded.

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